Why Freelancers Need To Do A SWOT Analysis

When I interview very successful entrepreneurs, they often mention the SWOT analysis they did on their business. SWOT is short for Strengths, Weaknesses, Opportunities and Threats. They look at advantages they can shore up, gaps that make them vulnerable to losing customers, new opportunities to pursue and threats that could derail them. These factors help them set priorities and inform the strategy they use to run the business from day to day.

When I read Adam Lashinsky’s piece “Yes, we’re in a tech bubble. Here’s how I know it,” in Fortune (where I am a contributor), it struck me that many freelancers would benefit from doing a SWOT analysis, too. They are always vulnerable to losing important projects if something new goes wrong with the economy. I was a staff editor at a national publication during the dot-com bust and I remember how much our freelance budget dried up.

Many freelancers are unprepared for things to go wrong. Most of us simply try to do a great job on our projects and to find enough of them to pay the bills every week. Doing that is so time consuming that few of us sit down and come up with a Plan B in case the economy hits a big bump.

Hopefully, if there is  tech bubble, it won’t pop soon. But Adam’s article reminded me that every freelancer needs to step out of the daily grind and plan for the unexpected. Take 30 minutes this week and do a SWOT analysis on your business.

One common weakness in freelance businesses is being too dependent on one or two customers. If you could not pay the bills if your biggest clients went away, make some efforts to diversify in coming weeks. Spend some time networking. Put up a new advertisement of your services. Look for other types of projects you have not tried before. It takes some juggling to get your daily work done while also doing business development, but it is essential. Having new opportunities in your pipeline at all times means you will be a lot less vulnerable if something unexpected happens.

Growing Your Business, Uncategorized

Million-Dollar Freelancing And How to Get There

It is hard for many new freelancers to imagine earning a six-figure income. But that goal can be very attainable if you stick with it.

Here’s some information that may get you inspired:

More solopreneurs are earning $1 million and up, according to newly released Census figures, which I covered in  more detail in Forbes.  In fact, their numbers increased 10% from 2011 to 2012. The U.S. government found that the number of “nonemployer” firms with $1 million to $2.5 million in revenue rose from 26, 744 firms 29,494 companies that period.

Even more impressive: There are 2,286 super freelancers, who earn $2.5 million and up. Their numbers are ticking up, too.

Do they earn this amount from year to year consistently or break into these income ranges on a one-time basis because of a windfall from a big project, such as selling a book? My guess is that it varies from entrepreneur to entrepreneur.

The first step to getting there is building a sustainable business. In reporting another post for Forbes, I learned that research by Gallup shows that most microbusiness owners don’t rely on their income from their business as their main source until at least the second year. That old saw about keeping your day job, at least for a while, seems to hold some truth.

One key step toward generating all of your income independently, according to recent research, is getting a handle on cash flow in your business. If you’re like me, you may not enjoy creating Excel spreadsheets and learning cloud-based accounting software. But the Corporation for Enterprise Development has found that using such methods can help you keep your personal cash flow steady, too. When you run a microbusiness, your revenue is often closely linked to how much money you can pay yourself–so giving your business finances a bit of extra attention can make your quality of life much better.

 

 

 

 

 

Uncategorized, Your Back Office

Freelancing Is The Ultimate Job Security

I’m in New York City this week working on a new project, a great new web site, Crain’s Wealth, aimed at helping entrepreneurs manage money. It’s a pleasure to spend time with many journalists who work at Crain, one of the steady bastions of quality through the past decade.

At dinner, I talked to one of them, one whose husband had recently been laid off from a job in the insurance business. You’d think that health care would be a steady job if ever there was one, what with the aging population. But, of course, that’s not true. She explained that the Affordable Care Act had thrown the market into an upheaval. Fortunately, her husband has found another job.

But the conversation helped me remember that though it seems freelancing is the ultimate insecure job, it’s actually the ultimate secure one. As long as I keep a good mix of clients, and don’t rely too much on any one for my income, I can never be fired in a devastating way. The perfect job, the one that tempts me to leave freelancing to return to a newsroom or to be part of a company team, may come along. But until and if it does, independence equals stability.

Making the Break, The Lifestyle

What’s Your Number?

After I wrote an article about secrets of $200,000 freelancers, a reader on LinkedIn commented: “I’d just be happy with $50,000 a year.”

Many people feel just as intimidated by the prospect of trying to earn a full-time income when they first start out as freelancers. So how do you get to the point that you can go to sleep at night knowing you can earn the equivalent of the salary at your old job–and pay your bills on time?

The first step is knowing the exact income number you need to hit to live the way you want. Then figure out what you can realistically expect to earn this year. For some freelancers who are just starting out, it may be $30,000 or $50,000. For others with a deeper network of professional connections who can help them get work, it may be $200,000. I’d suggest aiming for 50% to 75% of your income from your last job in your first two years. Set your sights high, but not too far beyond your reach. There’s a pretty steep learning curve in the beginning. Matching your former salary is likely to happen in year three or four, based on what I’ve seen among freelancers I know.

Then break your income goal down into monthly and weekly goals. Knowing that you need to earn, say, $962 a week, will help you make the daily decisions that get you to your annual goal.

Keep track of what you’re earning each week and invoice for each job immediately after it is done, to speed up your cash flow.

After using Excel spreadsheets in the beginning, I switched to a simple accounting system, Freshbooks, to keep track of the projects I’m doing. It’s free if you have a small number of clients, and is a lot easier than winging it. This is just one option. Other freelancers have told me they like Quickbooks or Wave Accounting.

Once a month, I use the “reports” function on Freshbooks to look at my monthly profit and loss statement. It tells me how much I made per month and how that compares to other months. Keeping an eye on this helps me stay in the same ballpark every month.

Tracking your projects with a system like this will keep you honest about how much work you’re getting done and what you’re really earning. If you had a slow week or worked on lower-paying projects this week and only earned $500 of your target $962, maybe you need to step up your pitching next week. To “finance” lower-paying work that really stirs your passions, you may need to take on less-exciting but higher paying gigs at certain times of the month.

If you’re a creative type, thinking this way may be alien to you. But it is actually very freeing to be organized about this stuff, boring as it may be. Coming up with a simple system to tackle the dry parts of freelancing can allow you to lead a more interesting life.

Last week, we had our first warm sunny day in months, and I was free to take my four-year-old son to the park to enjoy it. On days like that, I am grateful I am not “on the clock” somewhere, forced to sit in a cubicle far from my family. The ticket to having that freedom, as I’ve learned in nearly 7 years of freelancing, is staying on top of the business side of what I do.

 

Growing Your Business, Making the Break, Uncategorized

What Makes For A Good Freelance Client: A Rare Word

One of the best things about being a freelancer is that you chose with whom you work. When things are going well, of course, you have MORE choice, but you always have at least some choice.

My best freelance clients are those for whom I do can do outstanding work — that’s the first criteria. The next criteria is how much fun I have and how much I learn by working with them. The amount of money I make is somewhere on the list, but, well, I didn’t become a writer/editor because money was my first priority.

I was reminded of how much fun it is to learn something new when, today, one of my favorite clients shared a word with me: Prepropenultimate, which means third from the last. It doesn’t show up in my online dictionary, but its meaning seems fairly clear. If ultimate is the last, penultimate is next-from-last, and propenultimate is second-from-last then prepropenultimate is third-from-last. I think you can make a variant by using “ante” somewhere in the mix.

And yet another great thing about being a freelancer is that I could take a few minutes in my day to enjoy the new word and write this blog post about it!

The Lifestyle , ,

Just Say ‘No’ To Unpaid Internships

It’s truly frustrating to read about how many young people are being exploited in unpaid, post-college internships that seem to promise job opportunities but never do. Alex Williams conveys the frustration and sense of futility that many young creative types face every day in “For Interns, All Work and No Payoff,” an article in today’s New York Times that is worth reading.

There’s nothing wrong with an internship that offers college credit in lieu of pay. College credits have a real economic value–sometimes quite a bit. But there’s outright abuse afoot when young people are expected to subsidize their employers–some of which are giant corporations–in internships that offer no compensation at all. Someone is always getting paid in these companies–just not the intern.

So what can you do if you just graduated from college, want to work in a competitive, creative career and can’t get a toehold? Do not start your career by taking an unpaid internship once you’re past the point at which you can get college credit. Never let others devalue you and your work. A company that does this, no matter how prestigious it appears, is not worth working for. Even as a newbie, you have something to contribute. Any company that wants to hire you for free knows that. Otherwise, why would managers want you around?

Instead, hold onto your power and use all of your smarts and creativity to figure out a way to get paid for the skills you have to offer. Put up a profile on a freelance marketplace. Create a website to market the skills that you have. Take a menial job to subsidize your creative work for a while, if that’s what you have to do to pay the rent.

Eventually, as you get more experience, you will become better and better at what you do and be able to charge more for your creative work. Your work samples may pave the way for a job at a company that treats employees with respect–and pays them a fair wage. At that point, you will have more negotiating power with an employer, because you will know the actual value that your work has to your customers on the marketplace. Maybe by then you will have discovered that you can make more on your own and don’t want that job after all.

After reporting on careers and entrepreneurship for a long time, I have come to the conclusion that what we now view as a “job” is going away. It probably won’t disappear completely, but it is going to become rarer. All labor market trends point in this direction. Just Google the phrase “contingent labor” and you will see what I mean.

Unfortunately, many people still view traditional W2 jobs with benefits as the only source of employment. They have been raised to believe that they need to wait for a company gatekeeper to tell them they are good enough to work–or else they can’t possibly support themselves. Looking at life this way is a recipe for victimization in today’s job market.

The flip side of this is that people who are not afraid to dive into self-employment and entrepreneurship–and to find ways to develop their talents and market their skills on their own–are going to thrive. There’s no rule book for this way of life. You’ve got to make things up as you go along. Living this way can be scary and uncertain–and may not generate a lot of support among the more corporate types you know. Still, if you embrace the adventure of it and figure out how to earn a living doing what you love in your own independent business, it can be a lot of fun, too. It beats doing coffee runs for a bunch of well-paid managers–for free.

 

Making the Break, Uncategorized ,

How To Break Into Freelancing

Have you ever responded to an ad for “Native English-speaking article writers” and found that the pay for a blog post was barely enough to cover a cup of coffee? Then you’ll appreciate Brodie Norris’s post on Brazen Life called Don’t Get Deceived By These Six Freelance Job Post Scams.

The article, while very funny, does underline the big challenges facing folks who are plunging into freelancing without years of work experience or lots of connections in their field. How do you actually get established without being forced to write your blog posts while living in a tent?

There’s not really an easy route. In the beginning, you’ve got to do whatever you can to get some work samples, so you have some proof to future clients that you can deliver the goods. In journalism, I’ve seen friends build a portfolio through internships, volunteering their writing services to a nonprofit organization that has a newsletter, taking on reporting gigs for a small, local publication that is willing to teach them or, if their writing is very polished, tapping their contacts until they can get to an editor at a bigger publication where they want to write. Online freelance marketplaces can also be a good route to getting projects that will give you a chance to practice your craft and get better at it.

When I first got out of college, I started out writing for any publication that would give me a chance. I did some freelancing for an alternative newspaper in Connecticut where a journalism professor I knew was the editor, writing about things like the state’s ‘zine scene. In another gig that I think I found out about through career services at my college, I interviewed executives about their charitable endeavors for a local newspaper in a wealthy enclave of Connecticut. I worked at a nonprofit organization during the day that didn’t have a big budget to pay the staff, so when I did the interviews for these weekend assignments, I had to rely on a car my boyfriend at the time had kept parked at his mom’s house. It was a rusty yellow VW beetle with a rattling front fender that had been painted purple. I can only imagine what these donors thought when they heard what sounded like a malfunctioning lawnmower outside and then saw that car coming up their long driveways.

These first few articles paid very little–I think I made $35 a pop for the pieces on the charitable donors–but they turned out to be very valuable. I got a chance to practice my reporting and writing and get better at it. And when I applied for my first full-time journalism job, those were the clips I submitted that won me a chance to work as a writer every day, something I’ve done ever since then.

That was a while back, but I don’t think the rules of breaking into creative fields as  freelancer have changed all that much. You still need to persuade someone to give you a chance–and then you’ve got to run with it. Just follow Brodie Norris’s advice and avoid writing those blog posts that pay .50 for 500 words.

Making the Break, Uncategorized , , , ,

A Freelancer’s Resolutions

One of my closest friends just passed away unexpectedly, and I have spent the past couple of weeks trying to process this news. I was going to try to write about her here, but my feelings about this are so raw that I can’t bring myself to say much right now.

Her passing reminded me of how important it is to take a step back every once in a while to make sure that I’m not getting so caught up in deadlines that I neglect other things in life that are more important. My friend and I had one of our best conversations on a recent call, one that I made when I was supposed to be getting caught up on a project for work on a Sunday afternoon. I’m going to let myself pick up the phone and call my friends more this year. That would have sounded simple to my younger self, in the years before I had four kids and a freelance business where I constantly have projects due, but now it’s a little more complicated. I’ve come to realize that, kids or not, not making enough time for life outside of work is an occupational hazard. I’m determined to break out of it.

My other resolution is to say no more often to things that don’t matter. I want to free morephoto (19) time to do things that create breathing room in life, like going on a bike ride with my kids or hopping on a train into New York to go to an art museum with them or a park we love in downtown Manhattan. As a freelancer it is easy to get sucked into long conversations with tire kickers or to take on the wrong projects. And in a suburb like the one where we live, where there are endless children’s activities, it is easy to agree to jam in just one more fun extracurricular commitment, to the point that everyone is rushing all the time from place to place. This year, I’m going to be more careful about what I say yes to.

And yes, I want to build my business, too. Thinking back on six years of freelancing, the relationships with clients and projects that have been most meaningful always involved a collaboration that helped both of us learn and made each of us better at what we do. Working with people who care intensely about quality keeps me excited about my work. In 2014, I want to spend 100% of my time in situations like that.

Meanwhile, I’m going to be on the lookout for new tools and ways of doing my work that help me achieve more in less time. I figure if I can find even one new software or app that saves me an hour or two a week on the tedious parts of my business, like record keeping, that’ll be good progress.

And it will  make it a lot easier to pick up the phone more often to call the friends who really matter.

Happy New Year!

 

 

 

Growing Your Business, Uncategorized , , , , , ,

Is It Time To Listen To Your Heart?

If you’re working in a job that fills you with the dreads every Sunday, make 2014 the year that you do something about it. It is easy to fall into the trap of thinking that getting another full-time position is your only option. Freelancing can be a great way to replace a corporate income, if you are committed to making it work.

Of course, opting for self employment is a very personal decision, and it is not for everyone. Here are some questions to help you consider if it is right for you,

Is your heart driving you to do it? After six years of freelancing, I believe this is the most important key to success in freelancing. Yes, you have to be good at what you do and know how to sell your services–but if your heart is not in it, you will end up going back to a traditional job after a short while.

For me the most powerful motivation to freelance has always been having more time with my children. Your main reason for wanting to freelance may be very different. Maybe you are a free spirit who hates the structure of a corporate environment, a singer who wants to leave work early to go to rehearsals, a marathoner who wants to organize your work schedule around your running schedule, or someone who needs the flexibility to dash to an aging parent’s house in case of emergency. The exact reason doesn’t matter. What matters is that it’s an important enough motivator for you to help you ride out the rough parts of freelancing.

How do you feel about taking responsibility for your own financial security? Many people think freelancing is less secure than a corporate job. Having lived as both a corporate worker and a freelancer, I don’t agree. Most corporate jobs are pretty unstable these days. Corporate jobs give you the illusion of security by evening out your cash flow. You get paid at set intervals, and the corporation takes care of much of the burden of paying for health care for you. But, as you know if you have any friends who have been laid off, the economic stability that a gig like this brings lasts only as long as the job does. Then you’re out of luck until you find a new job.

It is very possible to achieve steady cash flow–without giving up on health insurance–in a freelance career, but you have to be committed to achieving these things. That means making a continuing effort to build a steady client base, saving a lot of what you earn to cushion you during slow periods and committing to paying for health insurance before you splurge on extras, like vacations. It is not easy to do these things–and you won’t get there overnight–but it certainly isn’t impossible.

I want to address an elephant in the room on this topic. You can do these things even if you don’t have a spouse brings in a corporate paycheck and benefits. I know this is true from experience. My husband is self-employed, too, in a one-person business. We manage to make the two-freelance-income lifestyle work (with four kids) because doing so is very important to leading our lives the way we want. I know other freelancers who are single parents and supporting children this way, in one case while homeschooling. If you want to make it work, you will be surprised at how creative you can be about doing so.

Can you let go of the idea of having a boss? Freelancing takes some confidence. There’s no supervisor to spur you on to exceed your past achievements or to give you a kick in the pants when you’re in a rut. You’ve got to motivate yourself to raise the bar or find some freelancing buddies to help you stay inspired. Of course, there’s a flip side to this. If you’ve been working in a corporate environment that isn’t very egalitarian, then you’ll find that the world of freelancing is often a lot fairer and less political. Your clients will care about one thing: Whether you can make their lives easier by getting the job done right. Once you experience how freeing this is, it will be hard to go back to the old corporate ways of doing things.

 

 

Making the Break, Uncategorized

Freelancing’s Winners

Many of us went into freelancing because we want something that has become the ultimate luxury in American society: Control of our time.

Even jobs offering a telecommuting option don’t give you full decision making power over the hours you work and where you get projects done. If the company wants you in the office next week for whatever reason, you’d better be there.

Freelancing can be a much better alternative for highly skilled professionals who want to know that no one else can take away control of their daily calendars–but it doesn’t work out that way for everyone, as the latest State of Independence in America report by MBO Partners points out.

Free agents who look at what they’re doing as a business tend to achieve the autonomy many of us crave, according to the report. Constantly cultivating clients who value their skills, they can pick and choose projects that fit into the schedule and lifestyle they want–and often make good money.

But those who bring an employee’s mindset to freelancing and end up handing over total control of their work flow to someone else, whether it’s single company bringing them on as a contractor without benefits or a temp agency, often end up miserable. They lack both control over their schedules and, in many cases, an adequate income. It’s an easy trap to fall into if you have lost a job and are desperate for income now, without the breathing room to think about how to build a business. Not surprisingly, many folks in this category yearn for a traditional job.

So how do you make sure you end up in the first group–loving life as a freelancer and able to pay the bills? Steve King, partner in Emergent Research, which conducted surveys for the report, shared his insights when we spoke recently for Forbes.

If you’re looking to take your business to the next level in 2014, take three minutes to read his tips. He’s devoted years to studying the freelance economy, and I consider him one of the world’s leading experts on independent work.

 

Growing Your Business, Making the Break, The Lifestyle, Uncategorized , , ,